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TMI Blog2016 (5) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... shares were acquired by the Assessee. This indicates that certain shares had been acquired by the Assessee by way of a gift. Undisputedly, for the purposes of considering whether the same were long-term capital assets or not, the date on which the donor acquired the shares is relevant and not the date on which the Assessee aquired the shares in question. In any view of the matter, it is not disputed that the statement of shareholding indicating the dates on which the subject shares were acquired was provided to the AO in response to the queries raised by him. Thus, it cannot be accepted that the AO did not consider the same while making the assessment order. Thus, it is apparent that the present case is one where the issuance of the impugned notice is occasioned by a change of opinion, which given the scope of Section 147-148 of the Act, is impermissible. - Decided in favour of assessee. - W.P.(C) 1962/201 3 & CM No. 3741/2013 AND W.P.(C) 2015/2013 & CM No. 3834/2013 - - - Dated:- 16-5-2016 - S.MURALIDHAR VIBHU BAKHRU JJ. For the Appellant: Mr Salil Aggarwal and Mr Ashish Kumar, Advocates. For the Respondent: Mr Zoheb Hossain, Senior Standing Counsel and Mr D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;) with two Mauritian companies, M/s Argon India Ltd. and M/s Argon South Asia Ltd. (hereafter 'the Acquirers'), for sale of their entire shareholding in PLL. In terms of the WSSPA, the consideration for the shares was fixed at ₹ 152 per share. In addition, the shareholders were also entitled to a consideration of ₹ 38 per share as noncompete fee. Since the PLL is a public listed company and the shareholding sought to be acquired by the Acquirers was in excess of the specified limit, the Acquirers were obliged to make an open offer in terms of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. In terms of the aforesaid Regulations, the Acquirers furnished a draft Letter of Offer seeking to acquire shares from public at the rate of ₹ 152 per share. By a letter dated, 27th December, 2006, Securities and Exchange Board of India (SEBI) directed the Acquirers to revise the offer price by including the non-compete fee payable to the promoter shareholders; that is, from ₹ 152 per share to ₹ 190 per share. 4.3 Thereafter, on 28th December, 2006, the Assessee as well as other promoter shareholders of PLL entered into a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received a notice dated 28th March, 2012 issued under Section 148 of the Act for AY 2007-08 (impugned notice). The Assessee requested for reasons for issuance of the said impugned notice and the same were provided during the course of hearing scheduled by the AO. The Assessee has filed her objections to the said reasons which were disposed of by an order dated 18th March, 2013. The said order is also impugned by the Assessee. Reasons for reopening of assessment 8. The reasons recorded by the AO indicates that he had received information from CIT(A) X pointing out that as per the WSSPA dated 3rd July, 2006, the consideration payable to the Assessee for her shares of PLL was agreed at ₹ 152 per share and in addition ₹ 38 per share was to be paid as non-compete fee. The reasons further noted that during the course of assessment proceedings, the Assessee had produced the original WSSPA as well as the Letter of Offer issued by the Acquirers for acquiring a minimum of 20% of the public shareholding at the rate of ₹ 190 per share in accordance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The AO noted that the SEBI advi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sent by CIT(A) X who had opined that the revised WSSPA was void and the consideration of ₹ 38 per share should be attributed to non-compete clauses. This, clearly, is a matter of opinion - and a highly contested one at that - regarding agreements in question, namely WSSPA and the revised WSSPA, which were duly considered by the AO at the time of initial assessment. 10. It is also relevant to note that in the case of another promoter shareholder of PLL, Hulas Rahul Gupta, who is also a party to WSSPA and revised WSSPA, the AO had accepted the sale of shares of PLL at ₹ 190 per share. Accordingly, the AO had not been consistent with what he had done in the case of the Assessee; the AO assessed the gains from sale of shares of PLL as capital gains in the hands of Hulas Rahul Gupta. 10.1 The Commissioner of Income Tax (hereafter 'CIT') was of the view that the assessment made in the case of Hulas Rahul Gupta for AY 2007-08 was erroneous as prejudicial to the interest of the Revenue. He, accordingly, made an order under Section 263 of the Act dated 15th March, 2010 modifying the assessment order and directing the AO to treat a sum of ₹ 17,72,17,484 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the possible views and could not be stated to have applied any incorrect provisions of law. Accordingly, the appeal filed by the Assessee was allowed. 11. We are informed that the Revenue has not preferred an appeal against the aforesaid decision of the Tribunal. It is also relevant to note that the reasons recorded by the AO in the present case is identically worded, in certain material parts, as the written submissions filed on behalf of the Revenue before the Tribunal in the case of Hulas Rahul Gupta. The AO issued the impugned notice after the Revenue had failed in persuading the Income Tax Appellate Tribunal to accept their submissions; the impugned notice dated 28th March, 2012 was issued five days after the pronouncement of the decision by the Income Tax Appellate Tribunal in the aforementioned case of Hulas Rahul Gupta. 12. The queries raised by the AO and the submissions made by the Assessee in response thereto amply bear out that the AO had examined the WSSPA, the revised WSSPA and the letter dated 27th December 2006 issued by SEBI to revise the public offer price for PLL shares from ₹ 152 per share to ₹ 190 per share. In these given facts, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 209 (Delhi) had explained that in cases where no query is raised, it must be held that the Assessing Officer had examined the subject matter even though there may not be any discussion in the assessment order. The Court had referred to the decision in Usha International (supra) and observed as under:- It is apparent from the above extract that even in cases where no query is raised by the assessing officer in the course of the original assessment proceedings it may yet be held that the assessing officer had examined the subject matter. This is so because the aspect or question in issue may be too apparent and obvious. However, the Full Bench cautioned by stating that such cases would have to be examined individually. It is, therefore, clear that even where no query is raised by the assessing officer and there is no discussion in the assessment order, it may yet be a case where the assessing officer would be considered to have examined the issue. However, we are not concerned with those type of cases inasmuch as in the present case the assessing officer had clearly raised a specific query with regard to bad debts/advances written off and the petitioner/assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1st April, 1989, the Assessing Officer has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in section 147 of the Act. However, on receipt of representations from the Companies against omission of the words reason to believe , Parliament re-introduced the said expression and deleted the word opinion on the ground that it would vest arbitrary powers in the Assessing Officer. 17. In Andhra Bank Ltd v. Commissioner of Income-tax: [1997] 225 ITR 447 (SC), the Supreme Court held that once the Income Tax Officer had passed an order after taking into account the relevant facts, it was not open for his successor to re-open the assessment at a later point of time. The relevant extract of the said decision reads as under:- The facts stated above clearly disclose that the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king into account all the relevant facts and, therefore, it is not open for his successor to now re-open the said assessment without any further tangible material giving rise to a reasonable belief that the Assessee's income has escaped assessment. 20. For the aforesaid reasons, W.P.(C) 1962/2013 is liable to be allowed. 21. The material facts relating to W.P.(C) 2015/2013 are also similar. In that case the Petitioner, Abha Gupta held 2.35% of the shareholding of PLL at the material time. She too had entered into the agreements alongwith other promoter shareholders WSSPA and revised WSSPA - for sale of her shareholding in PLL to the Acquirers. She filed her return of income for AY 2007-08 declaring income of ₹ 10,63,49,534/-. As in the case of Priya Desh Gupta above, her return was also picked up for scrutiny and she also provided all relevant documents including WSSPA and revised WSSPA to the AO; who after examining the relevant facts passed an assessment order under Section 143(3) of the Act on 5th October, 2009 accepting the income declared by her. 22. A notice under Section 148 of the Act was issued to Abha Gupta on 21st March, 2012 calling upon her t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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